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Informist, Friday, Aug 30, 2024

 

--India Apr-Jun capital formation growth 7.5% vs 8.5% yr ago 
--India Apr-Jun govt consumption growth -0.2% vs -0.1% yr ago 
--India Apr-Jun pvt final consumption growth 7.4% vs 5.5% yr ago 
--India Apr-Jun services growth 7.2% vs 10.7% year ago 
--India Apr-Jun industry growth 8.3% vs 6.0% year ago 
--India Apr-Jun construction sector growth 10.5% vs 8.6% year ago 
--India Apr-Jun manufacturing sector growth 7.0% vs 5.0% year ago 
--India Apr-Jun mining sector growth 7.2% vs 7.0% year ago 
--India Apr-Jun farm sector growth 2.0% vs 3.7% year ago 
--India Apr-Jun GVA growth 6.8% vs 8.3% year ago 
--Informist poll estimated India Apr-Jun GDP growth at 6.9% 
--India Apr-Jun GDP growth 6.7% vs 8.2% year ago 

--Nageswaran: High base post COVID-19 affecting svcs sector growth

--Nageswaran: Climate volatility may impact goods prices, agri supply

--Nageswaran: Geopolitical conflicts pose risk to growth, inflation

--Nageswaran: Potential fincl mkt correction may impact household fin

--Nageswaran: FY25 GDP may grow above 7%

--Nageswaran:Rural consumption stable, good monsoon to provide fillip

--CONTEXT:Econ adviser Nageswaran briefing media post Apr-Jun GDP data

--Nageswaran: Farm sector growth expected to pick up going ahead

 

NEW DELHI – India's GDP growth slowed to a five-quarter low of 6.7% in Apr-Jun due to a modest pace of government expenditure and low growth in net taxes, data released by the National Statistical Office showed. The Indian economy grew 8.2% a year ago and 7.8% a quarter ago.

 

The slowdown was largely along the expected lines. According to an Informist poll, the GDP growth in Apr-Jun was seen moderating to 6.9% in Apr-Jun, mainly because of a slowdown in government spending due to the General Elections.

 

The gross value added also slowed down to 6.8% in Apr-Jun from 8.3% a year ago. With net direct taxes posting only a small rise, the GDP growth converged towards the gross value added growth after two consecutive quarters of a large gap between the two.

 

Net taxes, the difference between indirect taxes and subsidies, rose 4.1% in the first quarter of the current financial year. In Jan-Mar and Oct-Dec, net taxes rose 22.2% and 31.2% respectively. As GDP is calculated by adding net taxes to gross value added, these strong growth rates in net taxes gave an outsized boost to GDP growth in the last two quarters, a factor which was not present this time.  

 

Among the three broad sectors of the economy, industry grew the fastest at 8.3% in Apr-Jun, followed by services at 7.2%, while agriculture stood last with a growth of just 2.0%.

 

Within the industry, the main drivers of growth were construction, which rose 10.5%, and electricity, gas supply and utility services, which grew 10.4%.

 

In the previous quarter, industry growth was a tad better at 8.4%, while growth in the agriculture and the services sectors improved from 0.6% and 6.7%, respectively.

 

On the expenditure front, gross fixed capital formation recorded the fastest growth of 7.5% in Apr-Jun, closely followed by private final consumption which rose 7.4%. Government consumption, which was down 0.2%, remained a drag. In the preceding quarter, gross fixed capital formation was up 6.5%, private final consumption expenditure rose 4.0%, and government consumption rose 0.9%. 

 

Briefing the media after the data release, Chief Economic Adviser V. Anantha Nageswaran said the healthy progress in monsoon rainfall and higher kharif sowing bode well for rural demand and agriculture sector output. He said GDP growth may be above 7.0% in 2024-25 (Apr-Mar) if the structural changes and schemes like the employment-linked incentive scheme announced in the Budget are implemented timely.

 

The economic adviser cautioned that climate volatility may impact the supply of agricultural products and prices of goods. He also cited geopolitical conflicts as a potential risk to growth and inflation. Another caveat he gave was that potential correction in financial markets could erode household savings.

 

Nageswaran observed that growth momentum remained strong in Apr-Jun, with all components of real GDP on the demand side, except for government consumption growing at a faster pace than GDP. The economic growth was backed by strong investment demand and upbeat business sentiments, he said. He said the growth in the services sector has been lower from a year ago for the last five successive months on account of the high base as the sector saw a boom after the COVID-19 pandemic.

 

The following table shows quarterly growth in gross value added at basic prices and GDP for Apr-Jun and previous quarters:

 

Sector	2024-25	2023-24
	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep	Apr-Jun
Agriculture	2.0%	0.6%	0.4%	1.7%	3.7%
Industry	8.3%	8.4%	10.5%	13.6%	6.0%
Mining	7.2%	4.3%	7.5%	11.1%	7.0%
Manufacturing	7.0%	8.9%	11.5%	14.3%	5.0%
Power and gas	10.4%	7.7%	9.0%	10.5%	3.2%
Construction	10.5%	8.7%	9.6%	13.6%	8.6%
Services	7.2%	6.7%	7.1%	6.0%	10.7%
Trade, hotels	5.7%	5.1%	7.0%	4.5%	9.7%
Financial services	7.1%	7.6%	7.0%	6.2%	12.6%
Other services	9.5%	7.8%	7.5%	7.7%	8.3%
GVA	6.8%	6.3%	6.8%	7.7%	8.3%
GDP	6.7%	7.8%	8.6%	8.1%	8.2%

 

The following table details the annual GDP growth (in %) in recent years as per the new series:

 

Year	Growth rate
2023-24	8.2
2022-23	7.0
2021-22	9.7
2020-21	(-)5.8
2019-20	3.9
2018-19	6.5
2017-18	6.8
2016-17	8.3
2015-16	8.0
2014-15	7.4
2013-14	6.4
2012-13	5.5

 

End

 

Reported by Pratigya Vajpayee

Edited by Saji George Titus

 

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